Fairbairn and Lillie built the ironpaddle-steamerLord Dundas at Manchester in 1830. The difficulties which were encountered in the construction of iron ships in an inland town like Manchester led to the removal of this branch of the business to Millwall, London in 1834-5. Here Fairbairn constructed over eighty vessels, including the Pottinger of 1250 tons, for the Peninsular and Oriental Company; the HMS Megaera and other vessels for the British Government, and many others, introducing iron shipbuilding on the River Thames. In 1848 he retired from this branch of his business.[3]

He experimented with glass cylinders and was able to show that the hoop stress in the wall was twice the longitudinal stress. When a cylindrical boiler failed, it usually fractured along its length owing to the high hoop stress in the wall.

This knowledge of how hoop stress increased with diameter, and how stresses were independent of drum length led to his invention of the Fairbairn-Beeley and his five-tube boilers, where a single large diameter shell was replaced by multiple smaller, and less stressed, shells. Eventually this would lead to the near-universal adoption of water-tube boilers with small tubes for high pressures, replacing the older fire-tube designs.

Fairbairn was one of the first engineers to conduct systematic investigations of failures of structures, including the collapse of textile mills and boiler explosions. His report on the collapse of a mill at Oldham showed the poor design methods used by architects when specifying cast iron girders for supporting heavily loaded floors, for example. In another report, he condemned the use of trussed cast iron girders, and advised Robert Stephenson not to use the concept in a bridge then being built over the river Dee at Chester in 1846. The bridge collapsed in May 1847, killing 5 people who were passengers on the local train passing over the structure at the time. The Dee Bridge disaster raised concerns about the integrity of many other railway bridges already built or about to be built on the rail network.

Fairbairn conducted some of the first serious studies of the effects of repeated loading of wrought and cast iron girders, showing that fracture could occur by crack growth from incipient defects, a problem now known as fatigue. He built large-scale testing apparatus for the studies, and was partly funded by the Board of Trade.

He also conducted experiments on pressurized cylinders of glass and was able to show that the highest stress in the wall occurs around the diameter. It is known as the hoop stress and is twice the value of the longitudinal stress which occurs along the length of the cylinder. The precise value depends only on the wall thickness and the internal pressure. His work was published in the Proceedings of the Royal Society and was of great help in analysing failures in steam boilers and pipes. In 1854 he founded the Manchester Steam Users' Association, which quickly became recognised as setting national standards for high-pressure steam boilers.[5] As the "Associated Offices Technical Committee" of British insurers the MSUA remains a national certification authority.[6][7]

Experiments to determine the effect of impact, vibratory action, and long continued changes of load on wrought iron girders, (1864) Philosophical Transactions of the Royal Society, London vol. 154, p311